President Bola Ahmed Tinubu has signed four new tax reform bills into law, introducing major changes that will affect workers, freelancers, businesses, and digital asset users across Nigeria.
The bills, introduced in 2024 by the Presidential Committee on Fiscal Policy and Tax Reforms, sparked months of debate among governors, lawmakers, and financial experts. The new laws aim to modernize Nigeria’s tax system and improve revenue collection.
One of the most notable changes is that all income must now be declared. Previously, employees only paid tax on their monthly salary through the Pay-As-You-Earn (PAYE) system. But under the new law, Nigerians must file an annual tax return that includes freelance work, rental income, dividends, and any other form of earnings.
This means that income from side hustles, small businesses, and even digital platforms must be declared and taxed accordingly.
The law also makes it compulsory for all Nigerians to have a Tax Identification Number (TIN). Anyone opening a bank account, signing a contract with the government, or applying for financial services like insurance or stock trading must now provide a tax ID.
Banks are now required to report individuals whose total monthly transactions reach N50 million or more. For companies, the threshold is N250 million. This gives the tax authorities better tools to monitor financial activity and track taxable income.
In line with global trends, the new laws have brought digital assets into the tax net. This means Nigerians who earn from cryptocurrencies, NFTs, or other digital assets must pay taxes on any profits made from their sales or exchanges. The law applies to both residents and foreigners doing business in Nigeria.
While enforcement is tightening, the new laws also bring relief for low-income earners. The tax-free threshold has been raised from N300,000 to N800,000 per year. This means more Nigerians, especially those earning less than N70,000 per month, will no longer pay personal income tax.
Additionally, essential items like food, education, rent, public transport, and healthcare will remain exempt from Value Added Tax (VAT), helping to reduce the cost of living.
Other Key Changes
– VAT remains at 7.5%, but will now go to the state where goods or services are consumed.
– Lawmakers kept the corporate tax rate at 30% but widened the definition of small companies to include those earning up to N50 million yearly.
– The president’s power to grant tax waivers has been reduced.
– Tax agencies must now get court orders before seizing taxpayers’ property.
– Failure to register with tax authorities attracts fines: N50,000 for the first month, N25,000 for every following month.
These reforms mark one of the biggest shifts in Nigeria’s tax system in years, and they are expected to increase the country’s non-oil revenue while making the tax burden more fair and inclusive.
